Monday, June 20, 2005

Notes on Shipping and Handling

Resist the temptation to pad your shipping and handling costs. Most eBay buyers are knowledgeable when it comes to postage rates. They resent attempts by sellers to squeeze a few extra bucks out of them with padded S&H costs. If you charge a handling fee, be sure that it is a reasonable amount so as not to raise buyers’ eyebrows when they check your S&H rates.

Some sellers proudly advertise that they charge actual postage only. This has the potential to give the seller an edge over competitors who charge inflated S&H costs. However, it also represents a lost opportunity to use a reasonable handling fee to help recoup the considerable costs involved in shipping products. Other sellers dangle the carrot of free shipping to entice buyers and build the S&H costs into the price of the product. This is a great idea, so long as it results in more sales and higher profits overall.

Determining the best S&H policy for your business requires a little experimentation and a little calculation. Examine what happens if you offer free shipping or charge actual postage only. Do your total sales increase? Do they increase enough to make up for money you could have earned by charging a reasonable handling fee? If you add a handling fee, do your total sales decrease? What if you increase or decrease the amount of the handling fee? Like all other aspects of your eBay business, making an informed assessment of your S&H policy will lead to higher margins.

If you decide to charge a handling fee, use eBay’s Shipping Calculator to help disguise the costs that you’re passing on to the customer. Offering the Shipping Calculator option on your listings allows buyers to calculate their own S&H costs based on their location. The calculator gives you the option of entering a flat price as a handling fee and automatically combines that amount with the actual postage. Your handling fee is discreetly bundled into the single S&H cost shown to the buyer.

Finally, maximize customer S&H satisfaction by opting not to display actual postage amounts on self-printed shipping labels. This option is offered both by the USPS/PayPal label printing service offered through eBay as well as third-party postage services such as Endicia (www.endicia.com). Sellers with accounts with UPS, FedEx, or other shipping companies also have the luxury of shipping goods without the actual shipping costs displayed on the label. This practice falls under the old adage of “What they don’t know won’t hurt them.” So long as your overall S&H costs are reasonable, your customers will be happy.

1 Comments:

Excellent post Phil and how well timed. Why just this AM, I was questioned by a Canadian eBay customer who didn't like the $19.95 shipping charge. The actual cost from Seattle to Manitoba was $16.25 when I put it in the caculator. I padded it because it (a) requires the completion of a customs form and (b) requires a trip to the post office. Due to the small difference and in the interest of maintaining customer relations, I charged her $16.25 without any of the above explanation. I charge a flat fee for Domestic, but leave it open for internationals because it's too hard to flat fee that. Sometimes just a little "padding" gets noticed, though.

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